A person is required to have health insurance. If a person is in violation, he pays a $1000 fine. The revenue from the fines is rebated lump-sum to all taxpayers.

A person is not required to have health insurance, but those with health insurance receive a $1000 tax credit. The cost of the tax credit is financed with a lump-sum tax on all tax payers.

Notice that there is no economic difference between these two scenarios. The difference is purely semantic.

A subsidy or tax credit for a certain activity, such as buying a house, getting married, having children, and growing certain crops, is economically equivalent to a tax on inactivity. The mortgage deduction can just as easily be labeled a renter's penalty or tax. So while it irks me that Obama wasn't more up-front with the mandate actually being a tax, it's economically identical to a tax credit for those who purchase health insurance (much like Paul Ryan's plan).

Now generally I oppose most such transfers because they are often thinly-veiled kickbacks resulting from corporate lobbying for artificially high profits (economists call this "rent-seeking"), but while there's plenty of rent-seeking fingerprints on Obamacare, the health insurance mandate tax is a little bit different. Here's why.

November 17, 2008

Sometimes, I have to wonder what our society would look like without sports. Last year's New England Patriots finished the regular season an unprecedented 16-0, and they were heavy favorites in the Superbowl to be the first team to complete a perfect season since the 1972 Miami Dolphins (whose perfect season had a shorter schedule back then). But those New York football Giants made mince-meat out of this tantalizing possibility, and so the Patriots are remembered more for what they could have been than what they achieved. Making the Superbowl a close dramatic contest was good for the sport, but the Patriots did not get rewarded with 40% of the championship or even 20% of the championship. No, they got absolutely zero percent. And I'm no whining Patriots fan. I'm actually a long-time Giants fan with a Rodney Hampton jersey (and as much as I liked Tiki Barber, this team only looks itself with a big smash-mouth bowl-them-over running back like Hampton or Jacobs).

Such is the nature of sports, where large stakes and drastic swings provide potent fuel for dramatic comebacks and big plays that sear themselves into our collective consciousness (I have to believe that even non-Giants fans will remember Eli Manning's pass to David Tyree). Fans and athletes live for this stuff, and all-or-nothing outcomes make perfect sense for an industry whose purpose is to entertain. High stakes make for great drama, and everybody hates to see such dramatic contests end in ties (which is exactly why hockey moved to the shootout, why you can expect football fans to whine about that Eagles-Bengals game, and why no sport allows a championship game to end up in a tie -- kinda like action movies).

I'm clearly a sports fan myself, but I think our society is not very well served when this win-or-lose attitude is forced upon young kids. When kids are left to their own devices, they usually play games without winners and losers. Games where the object is to merely to take turns doing a variety of fun activities, like tag, hide and seek, and duck duck goose. Heck, when I was a kid, we played a game that we called "throw up and kill." No, it didn't involve vomit, it involved throwing a football in the air, and then everybody would try to kill (tackle) whomever caught it. When tackled, they'd throw the ball up, and the game would resume again (and I will insist that "throw up and kill" is a funnier and more descriptive name than "smear the queer," and every bit as memorable).
Note that the object of these games is not to crown a champion, but just for everybody to have fun (we also played football, but throw up and kill was much more fun and we played it more often). This is the important point. Games don't have to be contests. I think it's really the hockey dad and soccer mom types who force the kids into organized sports which most kids probably do not prefer.

With this win-or-lose mindset ingrained as a kid, adults often mistakenly apply this to other areas of life.

August 21, 2008

It's been a bit of a difficult summer for me while I've been searching for direction. In addition to rekindling my creativity, I found some measure of solace and comfort in a couple of films. One of them is Joss Whedon's Internet video, Dr. Horrible (a hilarious musical about a supervillain played by none other than Neil Patrick Harris). The other work is WALL-E.

The movie's been out long enough that I won't attempt to write a full review. Suffice to say that it's a beautiful film on so many levels. The love story is incredibly moving, the humor is spot-on hilarious, and the visual animation is -- as always for Pixar -- breathtakingly beautiful. The expressiveness that they were able to get out of a robot is amazing enough (albeit achieved before in films like Star Wars and Short Circuit), but what floors me is that they were able to make a cockroach adorably cute. And not just any cockroach, but a realistically rendered one (no cutsey anthropomorphizing changes ala A Bugs Life). And in stark contrast with the Indiana Jones films, you will deeply care about the characters, and you will fear for their safety (including said cockroach) at several points throughout the movie.

So if you have not seen the film, it's definitely a must-see. And you may also want to stop reading this post, as it is primarily commentary directed towards people who have already seen the film, so there will be spoilers.

Don't worry, the protagonists are mostly robots, so when they all die a horrible and painful death, you don't see that much blood (just kidding!).

August 18, 2008

I recently finished up a Master's program in Economics at San Jose
State (although I'm still waiting for the degree to arrive in the
mail). I had hoped that this would make me better equipped to write
insightful commentary about our political economy, but thus far, the
main effect I have noticed is that people will now ask me questions I
don't have good answers for.

It seems that a day does not go by where I am not bombarded with
inane questions like, "Why does the economy suck?" and "What is the
stock market going to do tomorrow?" and "Why aren't you wearing any
pants?" Okay, perhaps not bombarded, as I have this bad habit of
drinking other people's milkshakes and eating their cookies with
rabidly enthusiastic zeal. So I try not to subject the good peoples of
the world to my presence that often. And okay, maybe those questions
aren't really so inane. Except for that last one. But they are
certainly not questions that economists are well equipped to answer
(and I'm not even an economist, I just play one on the Internets).

I have a master's in economics at San Jose State, have taught Principles of Economics there, and now work in educational technology (which dovetails nicely with my former career as a software engineer).